JANUARY 2011

Delivering Happiness A Path to Profi ts, Passion and Purpose by Tony Hsieh Uniquely You Learn how to shape your own path to success.

QUICK OVERVIEW In Delivering Happiness, Tony Hsieh uses personal stories to recount his journey to becoming CEO of .com. He also shares insights on why you should have a passion for what you do, regardless of the amount of money you are making—or Business Plus walking away from. © 2010, Tony Hsieh From his childhood experiences as a worm farmer to his stint as a poker player, ISBN: 9780446563048 to becoming a multimillionaire and the CEO of a company that has been ranked 246 pages, $23.99 as one of the “Best Companies to Work For” by Fortune magazine, Hsieh’s path has followed his passion for what he believed was right for him. In the end, his objective is to do business in a way that allows him and his co-workers to be a happy and productive tribe. SUCCESS Points In this book you’ll learn: APPLY AND ACHIEVE Tony Hsieh learned from his poker-playing days that choosing the right table was • Why the type of one way to ensure success. In the same way, choosing the type of business to build business you create or represent is of critical importance. If you’re a business owner, take a moment to is the most important consider whether your business re ects your core values. If you are an employee or decision you can independent contractor, are you choosing to align yourself with an organization that make for your future has a culture and message which meshes well with your own? Greater happiness (and reduced stress) is often the result of working and living in a way that harmonizes • How your personal with your core values. What do you need to do to create alignment between your happiness and values and your work? your professional happiness are linked • Why defi ning core values for your company is crucial

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’d played a little bit of poker in college, but like many • The guy who wins the most hands is not the guy who people, I always just considered it to be a fun form of makes the most money in the long run. gambling and had never bothered to actually study it. • The guy who never loses a hand is not the guy who makes Back in 1999, poker was not yet a mainstream activity. the most money in the long run. IMost people had never heard of the World Series of Poker, • Go for positive expected value, not what’s least risky. and TV networks like ESPN were not yet broadcasting poker • Make sure your bankroll is large enough for the game tournaments to the masses. you’re playing and the risks you’re taking. One of the most interesting things I learned about playing • Play only what you can a ord to lose. poker was the discipline of not confusing the right decision • Remember that it’s a long-term game. You will win or lose with the individual outcome of any single hand; but that’s what individual hands or sessions, but it’s what happens in the a lot of poker players do. If they win a hand, they assume they long term that matters. made the right bet, and if they lose a hand, they often assume they made the wrong bet. Strategy For the  rst few months, I found poker both fun and • Don’t play games you don’t understand, even if you see challenging, because I was constantly learning, both through lots of other people making money from them. reading di erent books and through actual experience • Figure out the game when the stakes aren’t high. of playing in the  eld. I started to notice similarities • Don’t cheat. Cheaters never win in the long run. between what was a good poker strategy and what made • Stick to your principles. for a good business strategy, especially when thinking • You need to adjust your style of play throughout the night about the separation between short-term thinking (such as as the dynamics of the game change. Be  exible. focusing on whether I won or lost an individual hand) and • Be patient and think long term. long-term thinking (such as making sure I had the right • The players with the most stamina and focus usually win. decision strategy). • Di erentiate yourself. Do the opposite of what the rest of I noticed so many similarities between poker and business the table is doing. that I started making a list of the lessons I learned from • Hope is not a good plan. playing poker that could be applied to business: • Don’t let yourself go “on tilt.” It’s much more cost- e ective to take a break, walk around, or leave the game Evaluating Market Opportunities for the night. • Table selection is the most important decision you can make. Continual Learning • It’s okay to switch tables if you discover it’s too hard to • Educate yourself. Read books and learn from others who win at your table. have done it before. • If there are too many competitors (some irrational or • Learn by doing. Theory is nice, but nothing replaces inexperienced), even if you’re the best it’s a lot harder to win. actual experience. • Learn by surrounding yourself with talented players. Marketing and Branding • Just because you win a hand doesn’t mean you don’t have • Act weak when strong, act strong when weak. Know more learning to do. You might have just gotten lucky. when to blu . • Don’t be afraid to ask for advice. • Your “brand” is important. Culture • Help shape the stories that people are telling about you. • You’ve gotta love the game. To become really good, you need to live it and sleep it. Financials • Don’t be cocky. Don’t be  ashy. There’s always someone • Always be prepared for the worst possible scenario. better than you.

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• Be nice and make friends. It’s a small community. YOUR CULTURE IS YOUR BRAND • Share what you’ve learned with others. Building a brand today is very di erent from building a • Look for opportunities beyond just the game you sat down brand 50 years ago. It used to be that a few people got together to play. You never know who you’re getting to meet, in a room, decided what the brand positioning was going to including new friends for life or new business contacts. be, and then spent a lot of money buying advertising telling • Have fun. The game is a lot more enjoyable when you’re people what their brand was. And if you were able to spend trying to do more than just make money. enough money, then you were able to build your brand. It’s very di erent today. With the Internet connecting Aside from remembering to focus on what’s best for the everyone together, companies are becoming more and more long term, I think the biggest business lesson I learned from transparent whether they like it or not. An unhappy customer poker concerned the most important decision you can make in or disgruntled employee can blog about a bad experience with the game. Although it seems obvious in retrospect, it took me a company, and the story can spread like wild re by e-mail or six months before I  nally  gured it out. with tools like Twitter. I learned the most important decision I could make was which table to sit at. This included knowing when to change tables. I learned from a book that an experienced player We simply continued doing can make ten times as much money sitting at a table with what we had always done: nine mediocre players who are tired and have a lot of chips compared with sitting at a table with nine really good players constantly improving the who are focused and don’t have that many chips in front customer experience while of them. In business, one of the most important decisions for an simultaneously strengthening entrepreneur or a CEO to make is what business to be in. It our culture. doesn’t matter how  awlessly a business is executed if it’s the wrong business or it’s in too small a market. The good news is that the reverse is true as well. A great In a poker room, I could only choose which table I wanted experience with a company can be read by millions of people to sit at. But in business, I realized that I didn’t have to sit at an almost instantaneously as well. existing table. I could de ne my own, or make the one that I The fundamental problem is that you can’t possibly was already at even bigger. I realized that whether in poker, in anticipate every possible touch point that could in uence the business, or in life, it was easy to get caught up and engrossed perception of your company’s brand. For example, if you in what I was currently doing, and that made it easy to forget happen to meet an employee of Company X at a bar, even if that I always had the option to change tables. Psychologically, the employee isn’t working, how you perceive your interaction it’s hard because of all the inertia to overcome. Without with that employee will a ect how you perceive Company conscious and deliberate e ort, inertia always wins. X, and therefore Company X’s brand. It can be a positive I started to force myself to think again about what I was in uence, or a negative in uence. Every employee can a ect trying to get out of life. I asked myself what I was trying to your company’s brand, not just the front-line employees that accomplish, what I wanted to do, and whether I should be are paid to talk to your customers. sitting at a di erent table. From my poker experience, I knew At Zappos.com, we decided a long time ago that we didn’t it was never too late to change tables. want our brand to be just about shoes, or clothing, or even online retailing. We decided that we wanted to build our brand to be about the very best customer service and the very best customer experience. We believe that customer service shouldn’t be just a department; it should be the entire company.

Page 3 SUCCESS.com SUCCESS BOOK SUMMARIES Advertising can only get your brand so far. So what’s a essentially a formalized de nition of a company’s culture. company to do if you can’t just buy your way into building the As it turns out, it doesn’t actually matter what your brand you want? What’s the best way to build a brand for the company’s core values are. What matters is that you have long term? them and that you commit to them. What’s important is the In a word: culture. alignment that you get from them when they become the default At Zappos, our belief is that if you get the culture right, way of thinking for the entire organization. Your personal most of the other stu —like great customer service, or core values de ne who you are, and a company’s core values building a great long-term brand, or passionate employees and ultimately de ne the company’s character and brand. customers—will happen naturally on its own. For individuals, character is destiny. We believe that your company’s culture and your company’s For organizations, culture is destiny. brand are really just two sides of the same coin. The brand may lag the culture at  rst, but eventually it will catch up. Your culture is your brand. We formally de ned the Zappos culture in terms of 10 Core Values: Five Ways to Instill 1. Deliver WOW Through Service Customer Service into 2. Embrace and Drive Change Your Company 3. Create Fun and a Little Weirdness Make WOW a verb that is part of your company’s 4. Be Adventurous, Creative and Open-Minded everyday vocabulary. 5. Pursue Growth and Learning 6. Build Open and Honest Relationships with Realize that it’s okay to re customers who are Communication insatiable or abuse your employees. 7. Build a Positive Team and Family Spirit View each call as an investment in building your 8. Do More with Less customer service brand. 9. Be Passionate and Determined Celebrate great service. Tell stories of WOW 10. Be Humble experiences to everyone in the company. Many companies have core values, but they don’t really commit to them. They usually sound more like something you’d Give great service to everyone: customers, read on a press release. Maybe you learn about them on employees and vendors. of orientation, but after that it’s just a meaningless plaque on the wall of the lobby. We believe that it’s really important to come up with core TAKING IT TO THE NEXT LEVEL values that you can commit to. And by commit, we mean that We did not invent the idea that having a vision that had a higher you’re willing to hire and  re based on them. If you’re willing purpose was important. We did not invent the idea that having to do that, then you’re well on your way to building a company a strong culture and core values was important. But through culture that is in line with the brand you want to build. You tours, the culture book, public speaking, Zappos Insights, Zappos can let all of your employees be your brand ambassadors, not Insights live, Twitter and our blogs, we found ourselves in a just the marketing or PR department. And they can be brand unique position: We had scaled our business from nothing to over ambassadors both inside and outside the o ce. $1 billion in gross merchandise sales in less than ten years, we had In the books Good to Great and Tribal Leadership, the authors a strong set of integrated core values, and our culture of being looked at what characteristics separated the great companies open and honest and pursuing growth and learning was leading from the good ones. One of the most important ingredients us to share, rather than hoard all the corporate knowledge and they found was a strong company culture. Core values are learning we had accumulated over the years.

SUCCESS.com SUCCESS BOOK SUMMARIES DeliveringBook Titile Happiness

In early 2009, we made Fortune magazine’s “100 Best If it weren’t for , I’m not sure how we would have Companies to Work For” list. We were the highest-ranking ended up resolving our alignment issues with the board. We debut in 2009. At our o ces, we were thrilled because that was might have remained at a stalemate. But as it turned out, an internal goal we had set in the early days of the company, our misalignment with the board turned out to be a blessing and it came just a month after we hit our $1 billion in gross in disguise. It just goes to show that you never know when merchandise sales goal, well ahead of schedule. something you perceive as a negative will ultimately turn out to But at the board level, we were at stalemate. The board be a good thing. wanted a  nancial exit, but internally at Zappos we didn’t want July 22, 2009, was the day we were planning on signing and to exit. We wanted to continue to build, and we were in it for announcing the pending acquisition to our employees and the the long haul. world. It felt like we were about to launch a rocket to the moon. I realized I was relearning another version of the same lesson Finally, at the predetermined time, I sent an e-mail to our from LinkExchange, when our company culture went downhill: employees. About twenty minutes afterward, I sent a follow-up the importance of alignment. A strong culture and committable e-mail letting our employees know that we would be having our core values are important because they create alignment among all-hands meeting two days later. employees. I was now learning that alignment with shareholders The room was packed. I was on stage at our all-hands meeting and the board of directors was just as important. looking over a crowd of seven hundred Zappos employees. We This was just another challenge we needed to  gure out. spent an hour covering everything that was in the e-mail I had So we came up with a plan. We would buy out our board of sent out two days earlier and answered additional questions our directors. employees had. As a surprise to our employees, Alfred and I We  gured it would cost about $200 million to buy out our announced that we were personally paying for and giving every board of directors, so we started looking for potential investors. employee a Kindle, Amazon’s electronic book reader. And When we started talking to Amazon in early 2009, however, then, as a  nal surprise we also announced that Amazon was both sides seemed to have a di erent perspective, compared paying for a big bonus to all of our existing employees to thank with several years ago. On the Amazon side, they seemed to be everyone for their hard work. more open to the idea of us continuing to run as an independent Without any prompting, everyone in the entire room entity so that we could continue building the Zappos culture spontaneously jumped from their seats, standing up cheering and business the way we wanted to. They had been following and clapping. our progress over the years and saw that our approach to To me, that one moment represented success far beyond what business was working for us. On the Zappos side, what I could have possibly imagined would have been achievable ten mattered the most was continuing to do what we were doing years ago. The moment signi ed far more than that. The uni ed for our employees and our customers while gaining access to energy and emotion of everyone in the room was not just about Amazon’s vast resources. my own personal happiness, and not just about the happiness of In our minds, we thought of a potential acquisition scenario Zappos employees. We were about much more than just pro ts more as a great marriage than as selling the company. Both and passion. Collectively, this marked the beginning of the next companies cared deeply about being customer-centric. We just leg of our journey to help change the world. had di erent approaches to it. Half intentionally and half by luck, we had found our path Even though our original goal was to buy out just our board to pro ts, passion and purpose. We had found our path to of directors and the shares that they held and represented, the delivering happiness. more we thought about it, the more that joining forces seemed to make sense. By doing so all parties would be 100 percent aligned, which was the whole challenge that we were trying to overcome with our current board of directors.

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ACTION STEPS Get more out of this SUCCESS Book Summary by putting what you’ve learned into action. Here are a few questions and thoughts to help you get started.

1. Are you working toward maximizing your happiness each day? 2. What are you passionate about? 3. What are your company’s values? 4. What is your company’s higher purpose? 5. Integrate core values into every part of your business. 6. Build a positive team and family spirit/culture for your company regardless of its size. 7. If you get the culture of your company right, most of the other stuff, including building a great brand, will fall into place on its own.

About the Author In 1999, at the age of 24, Tony Hsieh sold LinkExchange, the company he co-founded, to for $265 million. He then joined Zappos as an advisor and investor. Eventually he became CEO and helped Zappos grow to more than $1 billion in gross merchandise sales annually, making Fortune magazine’s annual “Best Recommended Reading Companies to Work For” list. If you enjoyed this summary of Delivering Happiness, In November 2009, Amazon.com acquired you might want to check out Zappos.com, Inc., in a deal valued at $1.2 billion. Good to Great by Jim Collins

Tribal Leadership by Dave Logan © 2010 SUCCESS Media. All rights reserved. Materials may not be reproduced in whole or in part ©in 2010any form SUCCESS without Media. prior written All rights permission. reserved. Published Materials bymay SUCCESS not be reproduced Media, 200 in Swisherwhole or Rd., in part inLake any Dallas, form without TX 75065, prior USA. written SUCCESS.com. permission. Published by SUCCESS Media, 200 Swisher Rd., Rework by Jason Fried LakeSummarized Dallas, TX by 75065,the permission USA. SUCCESS.com. of the publisher, FaithWords, Hachette Book Group, USA, 237 Park SummarizedAvenue, New by York, permission NY 10017. from Your the Bestpublisher: Life Now: Business 7 Steps Plus, to Living Hachette at Your Book Full Group, Potential 237 Parkby Joel Avenue,Osteen. ©New 2004 York, by NY Joel 10017. Osteen. Delivering Happiness by Tony Hsieh © 2010 by Tony Hsieh.

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